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A Real Option Dynamic Decision (RODD) Framework for Operational Innovations

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Date Issued:
2013
Abstract/Description:
Changing the business operations and adopting new operational innovations, have become key features for a business solution approach. However, there are challenges for developing innovative operations due to a lack of the proper decision analysis tools, lack of understanding the impacts transition will have on operational models, and the time limits of the innovation life cycle. The cases of business failure in operational innovation (i.e. Eastman Kodak Company and Borders Group Inc.,) support the need for an investment decision framework. This research aims to develop a Real Option Dynamic Decision (RODD) framework for decision making, to support decision makers for operational innovation investments. This development will help the business/organization to recognize the need for change in operations, and quickly respond to market threats and customer needs. The RODD framework is developed by integrating a strategic investment method (Real Options Analysis), management transition evaluation (Matrix of Change), competitiveness evaluation (Lotka-Volterra), and dynamic behavior modeling (System Dynamics Modeling) to analyze the feasibility of the transformation, and to assess return on investment of new operation schemes. Two case studies are used: United Parcel Service of America, Inc., and Firefighting Operations to validate the RODD framework. The results show that the benefits of this decision-making framework are (1) to provide increased flexibility, improved predictions, and more information to decision makers; (2) to assess the value alternative option with regards to uncertainty and competitiveness; (3) to reduce complexity; and (4) to gain a new understanding of operational innovations.
Title: A Real Option Dynamic Decision (RODD) Framework for Operational Innovations.
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Name(s): Onkham, Wilawan, Author
Rabelo, Luis, Committee Chair
O'Neal, Thomas, Committee Member
Pazour, Jennifer, Committee Member
Yazici, Hulya Julie, Committee Member
University of Central Florida, Degree Grantor
Type of Resource: text
Date Issued: 2013
Publisher: University of Central Florida
Language(s): English
Abstract/Description: Changing the business operations and adopting new operational innovations, have become key features for a business solution approach. However, there are challenges for developing innovative operations due to a lack of the proper decision analysis tools, lack of understanding the impacts transition will have on operational models, and the time limits of the innovation life cycle. The cases of business failure in operational innovation (i.e. Eastman Kodak Company and Borders Group Inc.,) support the need for an investment decision framework. This research aims to develop a Real Option Dynamic Decision (RODD) framework for decision making, to support decision makers for operational innovation investments. This development will help the business/organization to recognize the need for change in operations, and quickly respond to market threats and customer needs. The RODD framework is developed by integrating a strategic investment method (Real Options Analysis), management transition evaluation (Matrix of Change), competitiveness evaluation (Lotka-Volterra), and dynamic behavior modeling (System Dynamics Modeling) to analyze the feasibility of the transformation, and to assess return on investment of new operation schemes. Two case studies are used: United Parcel Service of America, Inc., and Firefighting Operations to validate the RODD framework. The results show that the benefits of this decision-making framework are (1) to provide increased flexibility, improved predictions, and more information to decision makers; (2) to assess the value alternative option with regards to uncertainty and competitiveness; (3) to reduce complexity; and (4) to gain a new understanding of operational innovations.
Identifier: CFE0005039 (IID), ucf:50002 (fedora)
Note(s): 2013-12-01
Ph.D.
Engineering and Computer Science, Industrial Engineering and Management Systems
Doctoral
This record was generated from author submitted information.
Subject(s): Real Options Analysis -- Operational Innovation -- Strategic Investment -- Competitiveness -- Operational Innovation Transformation
Persistent Link to This Record: http://purl.flvc.org/ucf/fd/CFE0005039
Restrictions on Access: campus 2014-12-15
Host Institution: UCF

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